Dedicated to exposing the abuses of human rights, threats to the security of the free world, and attacks on general decency committed by Communist China, and to influencing policy in the free world to ensure these egregious acts do not go unopposed.

Thursday, June 11, 2009

Is the CCP headed for a lost decade?

It didn't take long after the Tiananmen anniversary to slid into the rear-view mirror for the "engagement" crowd to spin up the CCP once more - this time as the saviors of the world economy. The lead cheerleader was World Bank President Robert Zoellick, who had this to say about recent "growth" in the CCP's realm this year (Breitbart): "By and large (China's growth) has not only been a stabilizing force, but a force that will pull the system (out of the downturn)."

While such nonsense is not entirely unexpected from Zoellick, who prior to his current sinecure was doing far more damage as U.S. Deputy Secretary of State, it certainly was treated as heady stuff in Zhongnanhai. There's only one problem: the CCP's economic "recovery" is largely a regime-driven fantasy that could very well repeat Japan's "lost decade."

To see what I mean, let's take a look at the recent "growth" Zoellick trumpets (Bloomberg). For starters, growth in the first quarter (January to March) was only 6.1% a figure that does not keep up with population growth - meaning the average resident under the CCP's thumb grew poorer this year.

Secondly, the forces behind the "growth" should be troubling to anyone knowledgeable of recent economic history (Bloomberg again):

China’s spending on factories, property and roads surged by the most in five years as the government’s 4 trillion yuan ($585 billion) stimulus package countered a record slump in exports.

. . .

Since the stimulus was announced in November, the nation has built 20,000 kilometers (12,430 miles) of rural roads, 445 kilometers of highway and 100,000square meters (1.08 million square feet) of airport buildings, the National Development and Reform Commission said on May 21. China is also building 5.2million low-rent homes over three years.

In other words, regime-driven "stimulus" was the main driver; without it, there might not have been any "growth" at all. To anyone even remotely familiar with 1990s Japan, this is not a comforting development.

A slew of Japanese governments tried public works spending in a desperate attempt to pull the Japanese economy out of the ditch. It failed so spectacularly that the period is now known as Japan's "lost decade." Even today, the Japanese economy is still feeling the after-effects of wasted resources, mounting debt, and lost private investment.

If this is where the CCP is headed, it will be a much rougher ride.

Japan's "lost decade" also came with unprecedented political competition. The long-governing Liberal Democratic Party actually lost power for brief intervals, and its dominance over Japanese politics was forever destroyed. Meanwhile, even within the LDP, reformers fought pitched battles for control - and sometimes actually won them. The economic doldrums brought with them a pathway to political maturity for the Land of the Rising Sun, a pathway it is still walking to this day.

The CCP, by contrast, will be in no mood for any political competition should the economy continue to stumble. Instead, we will see more arrests, more phantom concessions to protesters, and - as always when the Chinese Communist Party is involved - more bloodshed.

Even so, one would think that the CCP would find a way to muddle through, as it always has. I'm not so sure this time, and ironically, it could be the "engagement" crew itself that has unwittingly put in motion the regime's unexpected endgame.

What with Zoellick's comments (which are far from isolated) there will be many in the elites of the democratic world who are expecting and hoping for CCP-fueled economic growth to pull the rest of the world out of recession. When it doesn't happen, Beijing will be peppered with friendly advice on what to do different. In Japan, such advice was outwardly taken with a mixture of false gratitude and real annoyance, but opposition movements within the country seized upon the admonitions of Wall Street, Washington, and others to force domestic debates.

The CCP will allow no such thing. As it slowly dawns on the "engagement" crowd that the CCP cares less for their various nations' economies and more about preserving its own power, it could very well lose some of its strongest and most vital foreign supporters. It will certainly make the electorates in those nations far more anti-Communist in thoughts and votes.

Thus could the largest piece missing from the anti-Communist puzzle - a united free world determined to help the Chinese people take their country back - be put in place by the very people who are trying to prevent it from happening, all because no one seems to have remembered the lessons from Japan's "lost decade."